Fabio Panetta: 21st century cash - central banking, technological innovation and digital currencies

Keynote address by Mr Fabio Panetta, Deputy Governor of the Bank of Italy, at the SUERF/BAFFI CAREFIN Centre Conference "Do we need central bank digital currencies? Economics, technology and psychology", Bocconi University, Milan, 7 June 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1. Introduction

It is a great pleasure to be here. The topic of this conference speaks to the heart of some of the most challenging questions for central banks today: how is the digital revolution affecting the financial system? What is the impact on consumers, the economy and on central banks themselves? These are complex questions, related to the consequences of the fourth industrial revolution in our society, within which central bank digital currencies (CBDC in short) might one day play an important part.

I will not attempt to provide comprehensive answers to all of these questions. Rather, I will focus on some general issues related to the digital transformation of our society, the pros and cons of digital cash (as a means of payment and store of value) and, before concluding, recall some of the open issues regarding CBDCs.

2. The digital transformation of society

Technological progress is fostering the digital representation of many of our daily activities. For example, the use of physical letters and postcards has been dwarfed by emails and digital photos, with the estimated number of letter-like items sent worldwide in one year roughly equal to the number of emails sent in a single day.